Epstein: Strip Public Unions of Monopoly Power

It's Time To Strip Public Unions Of Their Monopoly Power

Richard A. Epstein

The Forward

July 13, 2007

A cause that has united liberal and conservative Supreme Court justices.

This past term, in Davenport v. Washington Educational Association, a unanimous Supreme Court rebuffed a union claim that its rights to freedom of speech were violated by a Washington state referendum which provided that unions could not use mandatory agency shop fees to influence elections or to operate political committees unless those payouts were affirmatively authorized by the individual. The union's claim rested on the view that the Washington law impermissibly altered the balance between union powers and individual rights that had been sanctioned in earlier Supreme Court cases.

In rejecting this quixotic claim, both liberal and conservative justices blocked yet another union effort to expand their extraordinary privileges. What now remains is the harder task of cutting down the special union privileges embedded in both statutory and constitutional law.

By way of background, federal and state labor laws allow for teachers unions to represent all workers within a given school district, with or without their consent. Dissenting workers may stay out of the union, but doing so means they forfeit all say in its organizational affairs. The union, however, is still able to collect fees, through payroll deduction, from these workers to conduct its ordinary business of collective bargaining.

The common justification for this payroll tax on nonmembers is to keep nonunion workers from free-riding on the union's collective bargaining efforts. Without that protection, workers would have an incentive to stay out of the union, which in its weakened condition will be less able to bargain effectively for its workers. Monopoly unions cannot survive without collective bargaining protections period and state coercion on union dues counters this risk of defection by preventing workers from competing against each other.

Modern labor law accepts these agency shop fees for economic negotiations. But simultaneously, many people resist letting unions use nonmember dues for political causes that nonmembers oppose.

That prospect is, of course, quite real, for at least some teachers decline union membership not as calculating free riders, but because of their philosophical opposition to unionization. Their free speech is violated if forced to contribute to causes that are inconsistent with their own political convictions.

Perhaps individuals are not, in this age of campaign finance laws, allowed to use their associational freedom to contribute as much to various causes as they would like. But freedom of speech is surely mocked when the law forces people to pay for political actions they oppose.

Everyone therefore accepts that nonunion members need some way to separate themselves from the union's political activities. The standard approach lets individual workers opt out of union political representation by signing some form. Placing the burden on the worker gives the union the benefit of inertia, given that some individual workers may, for instance, forget to file the needed forms for opting out.

To protect these workers, the Washington referendum reversed the default rule: now expenditures of union dues on political causes are unlawful unless affirmatively authorized by the individual worker. Inertia now cuts in the opposite direction: the union has to enlist indifferent and hostile workers to use their money for its extensive political activity.

Wholly apart from any First Amendment argument, the Washington law that the Supreme Court recently upheld makes a lot of sense. Right now no worker who opts out of a union can save the expenses on collective bargaining. Since that free riding is blocked, it is highly likely that a majority of nonmembers actively oppose the union's political agenda otherwise, why else would they refuse to join the union?

A good default rule minimizes errors by setting the initial position to match those dominant preferences. By that neutral standard, unions should have to persuade the doubters to join their cause.

The next question is whether injecting the First Amendment into the discourse somehow upsets this accommodation to nonmembers. Justice Antonin Scalia, speaking for a unanimous court in Davenport, hit the nail right on the head when he wrote: The notion that this modest limitation upon an extraordinary benefit violates the First Amendment is, to say the least, counterintuitive.

The earlier cases that allowed the union to collect dues for political purposes in the absence of explicit authorization required the union to notify individual workers so that they could opt out of political expenditures. It would be extremely odd to convert this minimum protection for nonworkers into a legal maximum of protection by manufacturing First Amendment political rights for unions. Yet the Washington Supreme Court performed this strange alchemy when it treated the money the union raised as its own, notwithstanding the state coercion used to place it in their coffers.

Indeed, as a matter of principle, we can go further and ask the why the union should ever have any hold over any part of the wages of nonmember workers. The free-riding objection makes sense only if collective bargaining organized by monopoly unions makes any sense.

In most markets, however, we do not condemn those individuals who opt out from some dominant organization as obnoxious free riders. Rather we welcome them as legitimate competitors who will bid down wages or prices below their previous monopoly level.

If, therefore, individual workers object to unions for any reasons, First Amendment theory should honor their stated political opposition to the union's economic activities. Put otherwise, their associational rights should give them blanket First Amendment protection against union membership.

Accordingly, the real tragedy with dues check-off systems has been the willingness of the Supreme Court to tolerate and of states to pass laws that require local governments to deal with any monopoly union in the first place. Any revenues that these governments raise from individual citizens are held in public trust, which means that they should be spent for the benefit of the taxpayers who provided them, not the union monopoly that seeks higher wages for less work.

We would all think it outrageous if tax revenues were spent on no-bid projects to favor often-unionized firms for the construction of streets or public buildings. Why, then, introduce just that regime through the back door by refusing to allow individual teachers to undercut the standard union contract by acting independently?

The right public policy imposes an explicit prohibition on the ability of any state or local government to yield to union demands for exclusive bargaining rights. The correct solution, across the board, lets unions represent the workers who choose to join their ranks, but not those who decide to stay out.

The unions are right to predict that this regime will lead to a decimation of their ranks: Few workers will want to pay a middleman who cannot extract monopoly wages. But what is bad for the union is good for the community, which benefits from hiring more teachers under contracts with lower wages and higher productivity.

Davenport is a welcome sign that the Supreme Court is willing to dismiss extravagant claims for new union privilege. It is doubly welcome that this decision united both liberal and conservative justices in a common cause.

Much more work remains to be done, however, before all undeserved legal privileges for public unions are eradicated from the workplace. Let us hope that Davenport spurs all those who care about education liberals and conservatives alike to work toward stripping public unions of monopoly power.

Richard Epstein, a professor of law at the University of Chicago, is a senior fellow at the Hoover Institution.

Comments

Teachers unions are teachers. When you say "what is bad for the union is good for the community" you really say thet what is bad for teachers is good for the community. Doesn't have the same tone though.